How gender affects monetary policy

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This article is published in collaboration with VOX EU.

A few weeks ago, John McDonnell, Labour’s shadow chancellor, wanted a review of the Monetary Policy Committee of the Bank of England to see if its monetary policymaking can be improved. Among the issues to be reviewed, he highlighted the gender balance of the Committee. This is an increasing crucial point in designing central bank governance. Women are increasingly represented in central banks. As of January 2015, 16 central banks were headed by women, either on an interim or full-time basis, the most well-known being Janet Yellen in the US and Elvira Nabiulina in Russia. In general, the representation of women in monetary policy committees seems to have increased in the last years. A natural question arises: What influences the gender composition in monetary policy committees?

Gender composition in monetary policy committees: Findings so far 

The literature on monetary policy acknowledges that in the real world, monetary policy is conducted by committees. It has also been claimed that committees can make more efficient monetary decisions via heterogeneity and diversity. At the same time, members’ heterogeneity can trigger regularities in the monetary action. Gender diversity, a major type of heterogeneity, is a potential relevant trait in the monetary policymaking. However, we know very little about the drivers of gender diversity in monetary policy committees.

When addressing gender differences in central banks committees, a crucial question is whether women have on average a more ‘dovish’ or a more ‘hawkish’ attitude than men. Previous research provided some insights on this question, although not being conclusive. Using voting records and board transcripts, Chappell and McGregor (2000) document the voting behaviour of individual FOMC members over the 1966-1996 period, providing a ranking by preference for ease – ‘dovishness’ – of 84 individuals who served on the FOMC. During this period, seven women have served on the FED board, and six of them are ranked among the 13 most dovish members. All female members of the FOMC could more often been qualified as doves rather than hawks. An opposite result has been obtained by Farvaque et al. (2010), who study the impact of the composition of the monetary policy committees on the inflation performances of nine central banks from major OECD countries and 175 central bankers over the period 1999-2008. They find that lower inflation levels are associated with a higher share of female members; therefore, women seem to be more hawkish, and the gender issue is more important in the inflation targeting countries.

An alternative way of investigating the relationship between gender and dovishness is by looking at the dissent voting behaviour in the monetary policy committees; a positive degree of disagreement would signal a degree of hawkishness, while a negative one signals dovishness. In explaining the degree of disagreement in the definition of the FED monetary policy decisions during the period 1994-2008, Bennani et al. (2014) find that during the 121 considered meetings, female members appeared to have a high dissenting attitude, whatever the sign of the degree of disagreement. Moreover, analysing the FED meetings in the period 1989-2008, Lahner (2015) finds that female FOMC members have a significantly higher probability of casting inconsistent votes than male ones.

Gender diversity and monetary policy: New research

In general, the female hawkish attitude can be explained by the overall trend towards more conservative central banks observed in the last two decades. In order to have been appointed, women needed stronger credentials, and, in this case, a hawkish reputation would qualify, both before the appointment and during the board service. Therefore, gender preferences may be endogenous with respect to the overall structural and institutional settings. This is exactly the perspective that we empirically investigate in our paper.

  • First, we realise that we need a metric. To that end we construct the first index that captures gender diversity of monetary policy boards – the GMP Index – which measures the share of women in monetary policy committees.

The rationale of the GMP Index is straightforward. The GMP ratio simply relies on the quotient between the number of women on the board and the total number of its members. The average share of women in monetary policy committees in our sample of 112 countries is 16%, however the variability among countries is quite high, with a standard deviation of 0.17. The overall descriptive analysis of the presence of women in the central bank committees seems to signal some regularities, i.e. the gender representation seems to be more likely if the country (i) is part of a well identified geographical area, such as North and Central America; (ii) has a relatively low income; and (iii) its official religion is Protestant or Lutheran. But how robust are these findings?

  • Second, our empirical analysis aims at identifying the drivers of gender diversity in monetary policy committees.

We estimate a model in which the GMP level calculated in 2015 is a function of a set of exogenous structural variables. The results confirm the expectations on the hawkish attitude of countries characterised by higher level of women’s participation.

  • Interestingly, we find that higher female representation is associated with higher levels of central bank independence and lower involvement of the central bank in both banking and financial sector supervision.

Indeed, higher levels of central bank independence are usually associated with more hawkish monetary policies. In particular, higher economic independence corresponds to less political (partisan) control on the monetary policy stance, which is associated with less inflationary monetary policies (Grilli et al. 1991). The low involvement in supervision signals that central bank bodies with higher female representation are more likely to occur in countries where the policymakers prefer to avoid facing over-powerful central banks, i.e. those involved in both monetary policies and supervisory activities (Masciandaro 2007).

Gender diversity and common law systems

Our results also show a positive correlation between the GMP Index and common law systems that can be easily explained. Anglo-Saxon systems are on average characterised by higher gender equality. At the same time, the positive correlation between orthodox religion and the GMP Index can be explained by the strand of literature that highlights that countries characterised by Roman Catholic religion share a more traditional view of women’s role in the family, and this might restrict women’s opportunities on the labour market and their professional careers.

Female labour force participation and the percentage of women in parliament are the two proxies for ‘women and society’. While the latter is not significant, the former is significant in most regressions and is positively related to the GMP Index. Therefore, we have evidence that higher female labour participation is better at promoting gender equality.

Finally, we find that French colonial origins matter. The data suggest that the specific French institutional setting during the years of colonialism might have created that particular milieu in which cultural and social elements have firstly proliferated and then merged in order to set up the proper environment for women to have more and better professional opportunities.


Bennani H, E Farvaque and P Stanek (2014), “FOMC Members’ Incentive to Disagree: Regional and Background Influences”, mimeo.

Chappell Jr, H W M, and R R McGregor (1993), “Partisan monetary policies: Presidential influence through the power of appointment”, The Quarterly Journal of Economics, 185-218.

Farvaque, E, H Hammadou, and P Stanek (2010), “Selecting Your Inflation Targeters: Background and Performance of Monetary Policy Committee Members”, German Economic Review, 12(2), 223-238.

Grilli V, D Masciandaro and G Tabellini (1991), “Political and Monetary Institutions and Public Financial Policies in the Industrial Countries”, Economic Policy, N13, 341-376.

Lahner T (2015), “Inconsistent Voting Behavior in the FOMC”, mimeo.

Masciandaro, D (2007), “Divide et Impera: Financial Supervision Unification and Central Bank Fragmentation Effect”,  European Journal of Political Economy , Vol.23, n.2, June, 285-315.

Masciandaro, D, P Profeta and D Romelli (2015), “Gender and Monetary Policymaking: Trends and Drivers”, Baffi Carefin Centre, Bocconi University, WP Series, n.12

Publication does not imply endorsement of views by the World Economic Forum.

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Authors: Donato Masciandaro is Full Professor of Economics, Chair in Economics of Financial Regulation, at Bocconi University. Paola Profeta is Associate Professor in Public Economics at Università Bocconi, Milano and Coordinator of the Dondena Gender Initiative. Davide Romelli is PhD candidate in Economics at ESSEC Business School and THEMA-University of Cergy-Pontoise.

Image: A woman walks on the esplanade of La Defense, in the financial and business district in La Defense, west of Paris. REUTERS/Gonzalo Fuentes.

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